Which one of the following statements is TRUE about the concept of crowding out? Select one: a. Crowding out causes the textbook multiplier to become larger b. “Crowding out” occurs because the Fed increases money supply and lowers interest rate c. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to increase d. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to decrease
Which one of the following statements is TRUE about the concept of crowding out? Select one: a. Crowding out causes the textbook multiplier to become larger b. “Crowding out” occurs because the Fed increases money supply and lowers interest rate c. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to increase d. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to decrease
Chapter24: Fiscal Policy
Section: Chapter Questions
Problem 15P
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Question
Which one of the following statements is TRUE about the concept of crowding out?
Select one:
a. Crowding out causes the textbook multiplier to become larger
b. “Crowding out” occurs because the Fed increases money supply and lowers interest rate
c. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to increase
d. “Crowding out” occurs because the Govt increases govt expenditures and this causes private consumption and investment to decrease
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